Spain says it expects its banks to set aside up to €50bn in further provisions on their bad property assets as part of a new round of reforms for the country's financial sector.
Luis de Guindos, economy minister, said it was essential that the banks clean up their balance sheets without imposing a burden on the treasury.
The €50bn figure, equivalent to about 4pc of Spain's GDP, is higher than private expectations by bankers.
Some analysts had speculated that the Popular Party government of Mariano Rajoy, prime minister, would set up a large, state-funded "bad bank" like NAMA to absorb the non-performing assets of lenders hit by the collapse of the housing bubble and the subsequent European economic crisis.
However, strong Spanish banks opposed the "bad bank" idea, arguing they could handle their own problems and that weaker lenders should if necessary be absorbed by their rivals.
That is the path now being taken by the government with Mr de Guindos saying there should be another round of consolidation among cajas, or savings banks.
"If you take international valuations as in the case of Ireland, at the most you are talking about the need for €50bn of extra provisions (by banks in Spain)," he said.
"In the great majority of cases, they can provide it themselves ... and it could be done not in one year but over several years."
Of the €338bn of property-related assets in the Spanish financial system, about €176bn are bad loans, substandard loans or repossessed properties and land, according to the Bank of Spain.
The banks have already covered a third of these bad assets with provisions. They were expecting to be told by the government and the Bank of Spain to set aside a further 20pc.
An extra €50bn -- more than 28pc -- would be more of a stretch.
Mr de Guindos outlined other reforms that Spain will implement.
They include new budgetary controls on the country's 17 autonomous regions and labour reforms that will give companies more power to set their own wages.